Australia stocks stumble as concern grows over white house

MELBOURNE: Australian shares were swept lower Thursday by worries over the turmoil in Washington, with banks leading a broad decline as investor confidence faltered across markets globally. It was a second straight day of sharp falls locally, as political developments continue to roil the White House and raise concerns the Trump administration won’t be able to push through a business-friendly agenda.

The uncertainty has buffeted banks in particular, given they had rallied strongly after the surprise election of Donald Trump on expectations his policies would help lift economic growth in the U.S. and spur inflation. Even with a modest recovery off its lows for the day, the S&P/ASX 200 fell 47.7 points, or 0.8%, to 5738.3–a more than seven-week low. That extends the index’s decline so far this month to 3.1%. The four largest banks collectively knocked more than 15 points from the index. Westpac Banking was the biggest drag, as it traded without the value of its upcoming dividend payment.

The Big Four lenders rose about 25% on average in the wake of U.S. election, but have pulled back since the end of April on worries about valuations against a lackluster backdrop for revenue growth and, more recently, the introduction of a surprise tax on liabilities in the federal budget. Sentiment in Australia was supported somewhat by the release of better-than-expected jobless figures. The number of people employed rose by 37,400 in April after a 61,000 jump in March, lowering the unemployment rate to 5.7% from 5.9%. Fairfax Media rallied 6.9% after receiving a second takeover offer from a U.S. private-equity firm. Building-products firm James Hardie slumped 7.8% after it recorded a 6% declined in fourth-quarter earnings, and Virgin Australia sank 5.6% after the airline reported a wider third-quarter loss. For the session, 2.53 billion shares were traded with a value of 7.63 billion Australian dollars (US$5.67 billion), Commonwealth Securities said.